Teva’s Challenge to Zoloft Patent Fails

A U.S. appeals court Friday limited the ability of generic-drug companies to challenge patents in a ruling affecting Pfizer Inc.’s antidepressant Zoloft.

Teva Pharmaceutical Industries Ltd. sought to challenge Pfizer’s patent on a method of making Zoloft so that the Israeli company could begin selling a generic version when the patent protecting the chemical composition of the drug expired in 2006. The U.S. Court of Appeals for the Federal Circuit in Washington said Teva’s suit had no legal standing.

The court upheld a ruling by a judge in Boston who said Teva didn’t have the right to file such a suit because there’s no legal dispute until it starts selling a generic version of the drug. Zoloft generated $3.36 billion in sales last year for New York-based Pfizer, the world’s biggest drug company.

“With Teva’s loss today, this could translate to a loss for the whole generic industry,” Banc of America Securities analyst David Maris said.

Teva initially filed an application with the Food and Drug Administration in July 2002 to produce a generic version of Zoloft. Because Pfizer hadn’t threatened Teva with a suit over that application, Teva had no basis to challenge Pfizer’s Zoloft patent, the Federal Circuit ruled in a 2-1 decision.

Circuit Judge Haldane R. Mayer, in a dissent, said the decision would harm efforts to bring low-cost drugs to consumers.

Generic-drug companies “suffer a real and defined harm when uncertainty exists as to their rights to manufacture and sell a generic drug product free from infringement allegations,” he said.

Teva spokesman Kevin Mannix declined to comment. Pfizer said it was pleased with the decision.

The dispute centers on the drug law known as the Hatch-Waxman Act, which seeks to balance the rights of makers of pioneering brand-name drugs with those of companies that want to sell low-cost imitations.

Pfizer shares fell 50 cents to $24.48 on the New York Stock Exchange.

Teva shares fell 44 cents to $27.44 on Nasdaq.